Live Index – Mon, 28 Apr 2014 Premarket

PREMARKET WORLD NEWS

June E-mini S&Ps (ESM14 +0.36%) this morning are up +0.24% and European stocks are up +0.66% on increased M&A activity after Pfizer confirmed that it proposed to buy AstraZeneca, Britain’s second-largest pharmaceutical company, for about 58.8 billion pounds ($ 98.7 billion). The U.S. and EU are expected to impose new sanctions as early as today on Russian companies and individuals close to Russian President Putin over the escalation of the Ukraine crisis. Asian stocks closed mostly lower: Japan -0.98%, Hong Kong -0.41%, China -1.52%, Taiwan +0.41%, Australia +0.09%, Singapore -0.76%, South Korea -0.24%, India -0.25%. Japanese stocks were dragged lower after Honda fell 4.5% when it forecast weaker-than-expected full-year profit. China’s Shanghai Stock Index fell to a 5-week low after China’s Securities Regulatory Commission late Friday said it will hold a meeting this Wednesday to review the IPOs of four companies, boosting speculation that new share sales will resume after a 3-month halt. Commodity prices are mostly higher. Jun crude oil (CLM14 +0.50%) is up +0.79%. Jun gasoline (RBM14 unch) is up +0.18%. Jun gold (GCM14 +0.01%) is up +0.02% at a 1-week high. May copper (HGK14 +0.18%) is up +0.27% at a 1-1/2 month high. Agriculture prices are higher. The dollar index (DXY00 -0.19%) is down -0.20% at a 2-week low. EUR/USD (^EURUSD) is up +0.25% at a 2-week high. USD/JPY (^USDJPY) is up +0.17%. The British pound climbed to a 4-1/3 year high against the dollar as increased M&A activity and a jump in a gauge of UK business confidence to a record high boosts the prospects for stronger British economic growth. June T-note prices (ZNM14 -0.10%) are down -2 ticks.

ECB Board member and Dutch Central Bank President, Klaas Knot, said that more evidence is needed on the effectiveness of quantitative easing and if the Eurozone inflation rate falls any further, the ECB could lower the deposit rate below 0%.

The German Mar import price index fell -0.6% m/m and -3.3% y/y, a larger decline than expectations of -0.1% m/m and -2.8% y/y

The UK Apr Lloyds business barometer rose to 66 from 44 in Mar, the highest since the survey began in 2002.

China Mar industrial profits rose +10.1% year-to-date y/y, an improvement from the increase from the +9.4% year-to-date y/y in Feb.

U.S. STOCK PREVIEW

This will be a busy week with the likelihood of new G-7 sanctions on Russia, the 2-day FOMC meeting on Tue/Wed, Tuesday’s U.S. Q1 GDP report (expected +1.2%), Friday’s unemployment report (payrolls expected +215,000), the Treasury’s sale of $ 15 billion of 2-year floating-rate notes on Tuesday, and a heavy earnings week. Today’s March pending home sales report is expected to show an increase of +0.7%, reversing most of the -0.8% decline seen in February.

Sanctions against Russia to be announced this week may include sanctions that restrict U.S. high-technology sales to the Russian defense industry, according to comments over the weekend by White House Deputy National Security Advisor Tony Blinken.

The merger between American Airlines (AML) and US Airways has been approved by a federal judge.

Merck (MRK -0.50%) is close to a deal to sell its consumer healthcare unit, according to Reuters.

Siemens (SI -1.34%) plans to compete with GE (BE) on its offer for Alstom, according to Bloomberg.

MARKET COMMENTS

June E-mini S&Ps (ESM14 +0.36%) this morning are up +4.50 points (+0.24%) on increased M&A activity. The S&P 500 index on Friday settled sharply lower due to (1) expectations for a new round of sanctions against Russia, (2) the Russian central bank’s unexpected 50 bp rate hike to 7.50% and S&P’s downgrade of Russia’s sovereign debt by one step to BBB-, the lowest investment grade level, and (3) a sharp sell-off in tech stocks driven by disappointing results from Amazon.com, which plunged -6.5% after forecasting an operating loss in Q2. The main bullish factor was the +1.5 point increase to 84.1 in the U.S. final-April U.S. consumer confidence index from the University of Michigan, which was stronger than market expectations of +0.4 to 83.0. Closes: S&P 500 -0.81%, Dow Jones -0.85%, Nasdaq -1.75%.

The dollar index (DXY00 -0.19%) this morning is down -0.157 (-0.20%) at a 2-week low. EUR/USD (^EURUSD) is up +0.0035 (+0.25%) at a 2-week high. USD/JPY (^USDJPY) is up +0.17 (+0.17%). The dollar index on Friday closed slightly lower: Dollar index -0.05 (-0.06%), EUR/USD +0.0003 (+0.02%), USD/JPY -0.16 (-0.16%). The dollar received a little support from the stronger-than-expected U.S. consumer confidence report of +1.5 to 84.1.

Quote

Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now.